Poverty is a growing problem in the United States, and six of 10 cities with the largest poverty-rate increases from 1999-2005 were in the Midwest, according to a report by The Brookings Institution’s Metropolitan Policy Program.
The 2005 poverty rate in large cities was 18.8 percent, compared with a rate of 9.4 percent for suburbs, and the overall percentage of people in poverty increased in both cities and suburbs from 1999-2005.
“These trends are in large part the function of the 2001-02 recession and slow wage growth thereafter for lower-skilled workers,” according to the report, “Two Steps Back: City and Suburban Poverty Trends.”
The report also notes that the suburban poor outnumbered their city counterparts by about 1 million in 2005 — the numbers had been roughly even in 1999. The Brookings Institution is a private nonprofit organization focused on independent analysis and recommendations for policymakers.
“Poverty rates rose significantly in Midwestern and Southern metropolitan areas, but remained steady in the West and Northeast,” according to the report, which is an analysis of Census data for cities and suburbs in the nation’s 100 largest metro areas.
“In the Midwest, where job losses were concentrated in the first half of the decade, poverty rates rose in 18 of 20 metropolitan areas. In the West, by contrast, only seven of 23 metro areas experienced poverty-rate increases, and poverty actually fell in five.”
Cleveland, Toledo, Detroit and Columbus experienced some of the highest gains in poverty rate from 1999-2005, while the coastal cities of New York and Greater Los Angeles experienced slight declines in poverty rate during that period.
Child poverty rates rose about 3 percentage points, on average, in Midwestern and Southern cities from 1999-2005, and the cities and suburbs of Houston, Dallas and Cleveland ranked high among those areas with a growing rate of child poverty.
While employment and wages were growing in the late 1990s, this decade has been “marked by an economic recession, stagnant wages for many workers, and job losses followed by what some have termed a ‘jobless recovery,'” the report states, and the regional impacts have been uneven.
The proportion of the U.S. population living below the poverty line rose each year from 2000-04 before leveling in 2005, when there were 38 million U.S. residents living in poverty, or 13.3 percent of the total population. That compares with 34 million living in poverty in 1999.
Some changes in the report may be attributed, at least in part, to cyclical changes in poverty rate, the authors note.
The 100 largest metro areas in the nation accounted for about 60 percent of the increase in poverty rate during the six-year study period.
The report notes that the “‘tipping’ of poor populations to the suburbs represents a signal development that upends historical notions about who lives in cities and suburbs,” though city residents, on average, are more likely to be poor than suburban residents.
The concentration of different industries in different regions has been a contributor to the variance in poverty rates, the report suggests. “For instance, from 2000 to 2005, the national economy shed roughly 3 million jobs in manufacturing and 400,000 in telecommunications and Internet data processing” while employment in finance, real estate and government sectors expanded.
“Differing regional specializations (such as manufacturing in the Rust Belt, Internet in the San Francisco Bay Area, finance in New York) thus shape local labor market conditions. Lower-skilled workers at risk of poverty need not have worked, or sought work, in these particular industries to have experienced the downstream effects of these declines or increases in sectors like retail or hospitality,” the report states.
Poverty rates can also be impacted by migration patterns, such as the movement of middle-class families to Southern metro areas and the inward migration of middle-income home buyers to high-cost housing markets on the West Coast.
“At the same time, immigration is spreading to a wider set of metropolitan areas than in decades past, especially the Southeast, which could alter poverty levels in those receiving areas. Thus, a rising or falling poverty rate in a particular place may indicate not only changes in the economic status of existing residents, but changes in the underlying resident population over time,” according to the report.
Poverty rates have historically been higher in Northeastern cities and suburbs than in the Midwest, though these regions experienced a statistical leveling by 2005.
Also, differences in city and suburban poverty rates were more pronounced in the Northeast and Midwest than in the West. This could be attributed to geography that restricts cities from annexing higher-income suburbs, for example, and could also be due to “the deeper legacy of racial and economic discrimination in their housing markets; and the heavier out-migration of middle-class families that most endured in the 1970s and 1980s.”
Poverty rates increased in 54 of the 100 metro areas studied from 1999-2005, while seven experienced a decline and changes in the other 39 areas were not statistically significant. The poverty rate grew in 18 of 20 large metro areas in the Midwest, in 21 of 37 Southern metro areas, and in seven of 23 Western metro areas. The West was home to five of seven metro areas that had declines in poverty during that period.
In the 1990s, Midwestern and Southern cities experienced a decline in poverty rates while poverty increased in the Northeast and in California.
An earlier study found that a slim majority of large cities experienced a poverty-rate decline in the ’90s, while about one-third had an increase. The poverty rate in 2005 grew in 45 of 94 central cities studied compared to 1999, while it was unchanged in 43 cities and dropped in six cities.
From 2000-05, Michigan and Ohio each lost over 200,000 manufacturing jobs, which is the equivalent of 20 percent of all jobs in that sector in each state, according to the report. Three cities in Texas also rank among the top 10 in poverty rate from 1999-2005, and all of these cities experienced increases in unemployment from 2000-03, “though migration dynamics in these rapidly growing areas may also have contributed to their poverty-rate climbs,” the report states.
In the 33 suburbs studied where poverty rates did change by a statistically significant amount, 31 percent had an increase in poverty rates while two saw a decline.
Cleveland, Dallas, Detroit, and Portland, Ore., appear on both the city and suburban top-10 lists for growing poverty rates.
“Continued growth in financial services and government employment has benefited New York and Washington, while expanding construction and professional and business services employment seems to have buoyed Los Angeles and its environs throughout the early 2000s,” the report states.
Metro-area economic health appears to be a key determinant of poverty dynamics, the report states, and poverty rates tended to move in the same direction between cities and suburbs in the same metro areas. “Among the 31 suburbs in which poverty rates increased by a statistically significant margin, 20 had central cities that also underwent increases.”
High-poverty cities tend to be mid-sized former-industrial centers of the Northeast “still dealing with the aftermath of significant job loss, high degrees of racial and economic segregation, and middle-class out-migration. Low-poverty Western cities tend to be more geographically expansive, economically buoyant, and in some cases (such as San Jose, Santa Rosa and Honolulu) much too expensive for poor families to live within their borders.”
The estimated U.S. child poverty rate increased from 16.6 percent in 1999 to 18.5 percent in 2005, and about one-third of all poor Americans were under 18.
“Large and growing numbers are the children of immigrants, many of whom have limited formal education and may be particularly susceptible to income losses during lean economic times,” the report states.
The poverty rate for children has generally risen at a faster clip than the overall poverty rate. In Houston, for example, the proportion of children in poverty escalated to an estimated 35 percent in 2005, up at least 6 percentage points from its 1999 rate.
“The regional variation in poverty trends from 1999 to 2005 highlights the important role of regional economic performance in lifting, and keeping, families and children out of poverty. Just as the recession differentially affected certain industries and areas of the country, so too were lower-income Americans made worse off in some places than others,” the report states.
Authors of the report suggest that there is a need for enhanced labor market insurance policies “to help dislocated workers and their families weather difficult times,” and that the Earned Income Tax Credit can be helpful in compensating lower-income workers who are losing hours or forced to take lower-paying work.
“The number of families claiming the EITC rose quite significantly in the early 2000s, especially in economically hard-hit areas of the country like Detroit, Cleveland, Memphis, and Baton Rouge. An expanded credit for workers who maintain at least a modest level of earnings could bolster the (program’s) effectiveness,” the report states.
An expansion of unemployment insurance and the provision of economic, human services and workforce development programs in areas with jobs loss in the manufacturing sector could also be useful in combating poverty, the authors suggest.
The spread of poor households from central cities into the suburbs does not necessarily lead to more opportunities in housing, education and employment, the report also suggests, and state and local officials should seek “inclusionary zoning, affordable housing trust funds, comprehensive housing plans, and other policy tools that secure residential opportunities for lower-income working families in areas of new growth and development.”
Social services providers tend to be based in central-city neighborhoods, the report states, “and lag the movement of important parts of their client base to the suburbs.”